Most Single-Family Offices Outsource To Elite Wealth Planners

Elite wealth planners are experts at delivering solutions to mitigate taxes and protect assets. They are also expert at employing legal strategies and financial products to help the super-rich and, increasingly, families that are less affluent to achieve their economic and personal goals and objectives.

Senior management at single-family offices is generally tasked with addressing a variety of financial and personal needs and wants of an ultra-wealthy family. Commonly, the single-family office needs to deal with a number of matters from estate and succession planning to asset protection and making planned gifts. At these times, the capabilities of elite wealth planners are usually required. Moreover, as circumstances change from new laws to shifting family dynamics, the expertise and the ability to develop deep understandings of their clients, which characterizes elite wealth planners, become extremely important.

Mounting evidence shows that a small but growing number of single-family offices with $1 billion or more under management are dealing with dynastic or intricate family relationships, and are steadily looking for elite wealth planners to join as senior executives. Meanwhile, extensive research shows that the great majority of single-family offices worldwide are outsourcing most of their sophisticated planning requirements to elite wealth planners, and a lot of this type of work needs to be done.

The decision to bring elite wealth planners in-house or outsource is a function of the following equation:

(Frequency + Criticality) – (Cost + Exclusivity) = Determination

Frequency is the likely amount of usage by the single-family office for the deliverable.

Criticality is the value valance of the deliverable to the family.

Cost is thedifferential expense of the deliverable depending on whether it is in-house or outsourced.

Exclusivity is the level of requisite proprietary access to the deliverable.

Determination is whether to bring the deliverable in-house or not.

While the services performed by elite wealth planner tend to be critical, they are often comparatively infrequent. The cost differential between having the planner in-house or outside usually favors outsourcing. Exclusivity, meanwhile, varies extensively as it is context dependent. All in all, for most single-family offices, it tends to be more cost effective to engage elite wealth planners as needed.

I am president of R.A. Prince & Associates, Inc. I consult with family offices, the ultra-wealthy and select professionals.